THE DETERMINANTS OF FIRM EXIT IN AN EMERGING ECONOMY: EVIDENCE FROM KAZAKHSTAN

Abstract

This paper examines the determinants of firm exit in emerging economy of Kazakhstan. Using cross-sectional data of all legal entities in Kazakhstan, I show that mature firms (5-10 years) are more likely to fail than young (0-5 years) and old firms (10 years and more). I confirm for the case of Kazakhstan the widely-established results for developed and most of the developing countries that bigger firms are less likely to exit. By controlling for competition, I find that firms in the major cities of Kazakhstan are more likely to exit, and by controlling for technology, I find that an old firm in the Mining or Agriculture industries is equally likely to exit as the young firm. These higher risks of exit are significantly dampened for partially or fully state-owned enterprises.